Indian Solar Industry: Challenges and Scope : Daily Current Affairs

Relevance: GS-3: Science and Technology- developments and their applications and effects in everyday life.

Key phrases: solar power, PV cell, Import dependency, Rate of return(ROI), tariffs, Discoms, T&D losses.

Why in News?

  • As India is making strides to fulfil its solar dream, Loom Solar (a Start-up) and its smart methodologies shall continue to provide the Indian solar industry with much-needed assistance for ‘Mission 2030’.

Solar power in India:

  • Installed capacity of solar energy in India has increased by more than 18 times from 2.63 gigawatt in March 2014 to 47.66 gigawatt in October 2021. As a result, India's current share of non-fossil sources based installed capacity of electricity generation is more than 40 per cent.
  • With about 150.54 GW of established renewable energy in 2021 (as per Nov 2021 report of Ministry of Power), there is another 350 GW commitment to be honoured by 2030.
  • Solar is expected to be contribute around 55% of the overall installed capacity of 500 GW taking the numbers to about 280 GW. However, despite being the third-largest market for solar in the world, India still has a long way to go when it comes to the global solar landscape.

Challenges faced by the Indian Solar Industry

  • Despite a significant push from the government, rooftop solar installation in India has not attained desired momentum India, especially due to the absence of lucrative ROI as solar prices are seeing north.
  • The overall cost of ownership: With cost and GST getting increased by 25% and 7% respectively in last one year, there is dampness in residential rooftop segment, and the cumulative installations stand less than 5GW till now. This will have a direct impact on the ROI breakeven timelines for the customers which stretches from 7 to 8 years to another few years. Then the homeowners are left to figure out alternatives to reduce their electricity bill.
  • Underdeveloped DISCOM Ecosystem: Current DISCOM ecosystem in India is built around thermal and by shifting to the solar there is a fear of cost competitiveness dovetailed with T&D losses leading to impact on profit margins.
  • Import dependency: As India is looking at achieving its target of emerging global leader in the solar front, it needs to address and resolve the imports of important components like solar cells, modules, and solar inverters that Indian solar industry is considerably dependent upon. Due to this over-dependency on imports, the industry ends up paying huge amounts of capital every year. According to data, in the first 9 months of 2021, India imported solar wafers, cells, modules, and inverters worth $1.97 billion.
  • The lack of closer industry-government cooperation for the technology to achieve scale.

Measures to tackle these Challenges:

  • Import Duty: The Indian government has been taking several measures to promote local manufacturing under its ‘Make in India’ mission and one of those moves is imposing a 40% duty on the import of solar modules.This will promote domestic manufacturing.
  • PLI Scheme: With an aim to boost India’s manufacturing capabilities and exports, the Production Linked Incentive (PLI) Scheme has been introduced. Under the provisions of this scheme, manufacturers receive support for setting up of integrated manufacturing units of high-efficiency solar PV modules and their sales.
  • BIS Certification: With solar products mandated to have BIS certification, the benchmarking for domestic manufacturer will help establish higher quality parameters which will also benefit the customers
  • ALMM: The MNRE has also introduced the Approved List of Models and Manufacturers (ALMM) of solar PV cells and modules with the objective of ensuring the reliability of the Solar PV manufacturers and protecting the interest of the customers.
  • Traditional net metering system in solar installations wasn’t seen as a welcome move, however, the concept of ‘gross metering’is being supported DISCOMs. In gross metering system, when a consumer purchases electricity from the national grid through DISCOM, then charge of per unit electricity is say Rs. 7.5 per unit and when a consumer sells the electricity of rooftop solar, then customer gets only 50% say in between Rs. 3-4 per unit.

Government programmes to boost solar power in India

  • Solar Rooftop Scheme: Under the rooftop scheme executed by SECI (Solar Energy Corporation of India), 200 MW of projects has been allocated. SECI launched a tender which is the largest global one of its kind offering 30% subsidy to the residential sector, private not for profit education organizations, social sector, and the health institutions.
  • Solar Park Scheme: MNRE has come up with a scheme to set up a number of solar parks across several states, each with a capacity of almost 500 MW. The scheme proposes to offer financial support by the Government of India to establish solar parks to facilitate the creation of infrastructure required for setting up new solar power projects in terms of allocation of land, transmission, access to roads, availability of water, etc.
  • VGF (Viability Gap Funding) Scheme: Viability Gap Funding scheme is implemented by SECI. In the past few years, SECI has made multiple project allocations under the VGF mechanism.
  • Solar Energy Subsidy Scheme: Under this Scheme, financial assistance and capital subsidy will be provided to the applicant to the extent of 50 percent, 75 percent and 90 percent of the basis of basic cost of the solar energy plant. The Government Yojana explains that a person is eligible for a subsidy if he has solar panels installed on the rooftop. The subsidy is decided as per the capacity of the solar power plant..

Way forward:

  • The need for focused, collaborative and goals driven R&D to help India attain technology leadership in PV.
  • The need for a better financing infrastructure, models and arrangements to spur the PV industry and consumption of PV products.
  • Training and development of human resources to drive industry growth and PV adoption.
  • With solar panels and solar systems getting more efficient vs their earlier generation, customers are wanting to invest in a technology that is getting them better output per square meter of the space they have.
  • So there is a constant need to invest in research & development of more efficient solar ecosystem involving energy storage systems. Like shark bifacial panels that are generating electricity from both front and back of the solar panel.
  • As India is making strides to fulfil its solar dream, Loom Solar and its smart methodologies shall continue to provide the Indian solar industry with much-needed assistance for ‘Mission 2030’.

Scope of Solar energy industry in India:

  • The generation of solar energy has tremendous scope in India. India being a tropical country, receives solar radiation throughout the year. With 3,000 hours of sunshine, this is equal to more than 5,000 trillion kWh of solar radiation per square meter.
  • India has vast solar potential; it is a lucrative opportunity for entrepreneurs to start a solar business in India. With the growing economy, India’s power consumption is going to rise, so the solar energy business in India is the ideal way to manage the balance between economic growth and sustainable development.
  • The government is constantly pushing and supporting the solar business in India through various programs and initiatives by enabling an increase in solar power at a subsidized cost.

Source: Live Mint

Mains Question:

Q. In the growing demand of renewable energy, discuss the potential of solar industry in India? What are the challenges faced by solar industry and measures to tackle them? Critically analyse.